A well known credit repair agency goes over the steps car buyers with poor credit can take to improve their credit scores before submitting an application for an auto loan
In some cases a few minor tweaks can make a major impact in the auto loan terms by lenders to applicants with less than perfect credit.
Here at Auto Credit Express we’ve seen the difference this can sometimes make because for the past twenty years we’ve been helping buyers with bad credit looking for online car loans find new those car dealers that can give them their best opportunities for car loan approvals.
Interest rates for buyers with problem credit
In this instance we’re talking about how car buyers – even those with crummy credit – can qualify for a better auto loan interest rate simply by doing a little bit of research.
According to Dorothy Guzek, a credit counselor with the credit repair company GreenPath, it’s important for borrowers to realize that there are two pre-qualifiers to getting a better interest rate on a car loan. “One is to have a good credit score,” says Guzek. “The second is to have a favorable ‘debt to credit ratio.’ Both of these components are equally important.”
During the same discussion she addressed a number of questions about car loans that could even help car shoppers with credit issues. Here they are:
How long before making an auto purchase should buyers start getting their credit in order?
Everyone should look at their credit report at least once a year. You can get a free copy of your credit report at www.annualcreditreport.com, but you do have to pay for a score. Guzek recommends paying for the score and suggests pulling the report at least six months before you start auto shopping. “This will allow you ample time to correct any incorrect information that you might find.”
How high should auto buyers aim to get their credit score before buying a car?
Currently there are three major credit bureaus, Equifax, TransUnion and Experian, and each has a slightly different scoring system. As a rule of thumb, a grade A score is between 680 and 719. “Credit scores are like your high school report cards. There was nothing wrong with a B or a B+, even though an A+ score may bring you a better interest rate,” said Guzek. “The bottom line is to make sure you work towards getting the best score possible under your current circumstances.”
Why shouldn’t consumers open or close credit cards before purchasing a car?
Guzek explains that if you close a card without a balance, you are raising your debt to credit limit ratio, which lowers your credit score. If you close your oldest card, your length of credit history becomes shorter and this lowers your score. If you open up new cards, it signals to the lender that you may need credit cards to pay your existing bills and this, in turn, lowers your score.
The Bottom Line
This is where it gets interesting. If their credit scores are good, tweaking them by following these tips could help these kinds of borrowers qualify for a lower interest rate. For car shoppers with credit issues, following these tips could turn a potential credit denial into an approval.
So there it is.
Another good tip: Auto Credit Express matches people that have experienced difficulties with their auto credit with new car dealers that can offer them their best chances for approved car loans.
So if you’re ready to reestablish your car credit, you can begin now by filling out our online car loan application. Auto Credit Express matches people that have experienced difficulties with their auto credit with new car dealers that can offer them their best chances for approved car loans.
So if you’re ready to reestablish your car credit, you can begin now by filling out our online car loan application.
Get your free credit score now! Get a copy of your most recent credit score.
Are you paying too much on auto insurance? Compare rates in your area and save.